Korean brokerage firms buy two UK logistics centers for $240 mn

Two South Korean brokerage firms – KB Securities Co. Ltd. and Kiwoom Securities Co. Ltd. – have teamed up to buy a logistics center for 167 billion won ($150 million) which is leased to British supermarket chain Sainsbury’s, betting on the UK's steady economic growth and solid online commerce outlook.

KB Securities, a unit of South Korea’s top lender KB Financial Group, also joined hands with an unidentified domestic institution to acquire a logistics center used by BAE Systems, a British defence and aerospace company, for around 100 billion won ($89 million), according to an KB Securities source on June 8.

“After the UK pound tumbled to over 20-year lows, their relative asset value has declined,” the KB Securities source told the Korean Investors. “With UK economic indicators improving and online transactions on the rise, we expect the asset value of logistics centers will grow.”

Earlier this year, the pound slumped to a 30-year low against the dollar on growing concerns about the Brexit fallout.

The acquisitions were made through two equity funds set up by South Korea’s LB Asset Management which structured the deals from equity purchase to borrowing.

The source declined to identify the seller and the lenders for the transactions.

Financing details are as follows:

The two logistics centers will continue to lease to BAE Systems and Sainsbury for the next 20 years, respectively. Rents will be adjusted higher in line with inflation, and tenants bear maintenance and repair costs, as well as tax and insurance payments.

The logistics center used by Sainsbury’s covers an area of 73,000 square meters in the UK’s logistics Golden Triangle, while that of BAE Systems covers 24,000 square meters in Cheshire.

By Ikhwan Kim

lovepen@hankyung.com